FX Action: The dollar has corrected some FX Action: The dollar has corrected some during the European AM session, which has seen EUR-USD rebound about 30 pips to the 1.0850 area and USD-JPY dip below 124.30. The greenback has seen losses of a similar magnitude against sterling and the Aussie dollar, among others. There are no fresh news drivers, and today's U.S. calendar is pretty quiet, featuring revised production data. Most dollar pairings have remained within Monday ranges so far.

President Obama nominates Kathryn Dominguez to Fed boardPresident Barack Obama has nominated Kathryn Dominguez, a professor at the University of Michigan with a background in international economics, to the Fed's board of governors. In a statement regarding the nomination, Obama said Dominguez has the "proven experience, judgment, and deep knowledge of the financial system, monetary policy, and international capital markets to serve at the Federal Reserve during this important time for our economy."

Fed final capital surcharge rules for big banks Fed final capital surcharge rules for big banks were proposed for 8 institutions, with all expected to meet the requirement over a 3-year phase-in. By example, there would be a 4.5% surcharge for JP Morgan and 3.5% for Citi, with only JPM facing a $12.5 B shortfall from these goals currently (down from $20 B in December). Fed governor Tarullo noted that the Fed will accordingly tailor stress tests for the largest banks later in the year and the final rule would not add surcharges to the stress test excercise. In an effort to head off contagion this is seen by some as a tax on banking and by regulators as designed to deter over zealous risk taking.

12:50 EDT

Demand for floating rate corporate bonds has plunged Demand for floating rate corporate bonds has plunged even as overall issuance has posted a record this year, according to a WSJ report (subscription). Institutional investors aren't that keen on the protection against higher rates offered by FRNs, given their outlook for a subdued and gradual Fed interest rate path. In some cases the up front yield sacrifice of up to half for an FRN vs fixed debt issue isn't viewed as sufficient compensation for potential subsequent gains/protection. Short-term floaters are also a risk for issuers, who may have to tap the market again at higher yields. The article concludes that this is also an expression of the more stable rate environment of late given the stress of the Greek crisis and other events on keeping a lid on global yields.

Treasury Option Action: mixed positioning Treasury Option Action: mixed positioning in very quiet conditions, including a bearish purchase of 12k in August 125.5 puts and a bullish purchase of an 8k x 12k September 126/127 call 2x3 for a net volatility sale equal to 31% of the at-the-money straddle. Also on the vol side were sales of 1.5k in September 126 straddles and 1.5k in October 125 straddles. September 10s are 8-ticks lower near 125-28 after hawkish Fed Bullard remarks, compared to a range of 126-05 to 125-225 on Globex.